When we talk about budgeting, most communities understand the need for and importance of an annual budget.
Better managed communities have taken their budgeting to the next level. While it is not discussed of as budgeting, these communities have established a process for improvement and enhancement more forward looking than the annual budget.
All communities have a wish list of projects. Some desire new or updated amenities. There may be a need for new windows, roof or façade. Outdated elevators may need to be replaced. Communities that are current in building maintenance may want to become more energy efficient thereby reducing future costs. It is rare for any community to have sufficient funds for their entire wish list of projects.
The next level of budgeting is to formalize this wish list and place projects in priority order. Next to each item, determine its costs and any deadlines for completion. Some projects will be low in cost and easily supported in the current operating budget. Others may require a number of years before the necessary funds are available. Perhaps a special assessment is warranted to expedite some projects. For less urgent projects, a nominal increase in monthly condo fees may be sufficient to accumulate the necessary funds for projects to be undertaken in the near future.
This list should incorporate both desired and necessary projects. Some projects may be incorporated in a current reserve fund study, and partially or fully funded by the reserve fund. Many are unlikely to be part of the reserve fund study.
Each year, this list should be updated. Some projects will have been completed and removed from the list. Others may have become urgent, unnecessary or newly added. There may be a need to revise some costs.
The annual budget for each year would include those projects to be undertaken in the coming year and their estimated cost.
Having a current list of desired projects and costs simplifies planning for the future.